Friday, October 14, 2011

"Google’s Gangbusters Quarter: Analysts React" (GOOG)

The stock is up $34.17 (6.11%) at $593.16.
MarketBeat's Mark Gongloff does the heavy lifting:
Google shares are up 7% in early trading after the company took high expectations for its third-quarter earnings season and beat them like they owed Google money.

Wall Street analysts, too, have been beaten into submission this morning, the 40 or so of them that cover Google lining up in single file to kiss the ring. None really ever get into the existential question of why they have such a difficult time figuring out Google’s earnings ahead of time and what the implications of that are for shareholders.

But, hey, who’s counting? Certainly not investors, who are scrambling this morning to become shareholders.
Goldman Sachs is among the more restrained of the analyst set this morning, raising its price target on the stock after raising EPS and revenue estimates — and yet keeping a “neutral” rating on it:
For 4Q2011 and 2012, we raise our net revenue and EPS forecasts on higher paid click growth assumptions, only slightly offset by lower CPC [cost per click] growth. For 4Q2011, we raise our net revenue forecast to $8.3 bn from $7.9 bn and our non-GAAP EPS estimate to $10.68 from $9.66. For 2012, we now model net revenue growth of 22% from 20% (vs. our 2011E of 33%) equating to $35.7 bn vs. prior $34.4 bn, while our non-GAAP EPS forecast rises to $45.52 from $39.99. This raises our 2013 non-GAAP EPS to $53.85 from was $46.32.
We raise our 12-month price target to $660 from $650 based on our higher estimates. Our valuation is based on an equal weighting of our DCF, EV/Sales, and P/E analysis. At about $595 in the aftermarket, Google trades at 13X our new CY2012E EPS. We remain on the sidelines as we wait to see if the inflection in paid click growth is sustainable, while at the same time finding signs that emerging growth opportunities are starting to see improving monetization trends.
Citi analysts are similarly impressed with the quarter — and even make the rare admission they wish they’d been more bullish earlier — but still not enough to put a “buy” rating on the stock...MORE